Canadian biotechnology company QLT Inc. is cutting its workforce by two-thirds, leaving it with 68 employees after a downsizing brought in by new leadership following a proxy battle waged by some of its shareholders.

Among those leaving is Robert Butchofsky, who has been QLT's president and chief executive. He has agreed to stay until July 31 as part of the transition.

The Vancouver-based company had been one of Canada's most successful biotechnology firms based on its treatment for a common form of age-related blindness.

But sales of Visudyne have fallen and QLT has struggled in recent years to find another commercially successful product.

As a result, QLT's new chairman says the company is cutting 146 of its 214 remaining jobs.

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QLT 1-year stock chart

The move comes at the same time as another Vancouver-based biotech, Cardiome Pharma Corp., announced it is cutting 85 per cent of its workers after pharmaceutical giant Merck said earlier this year it was terminating a joint drug development venture.

Downsizing to cost up to $17M

Butchofsky says the downsizing will reduce QLT's annual operating expenses by $45 million to $50 million in 2013. The downsizing will cost about $14 million to $17 million, mostly for severance and change-of-control payments.

QLT's new board of directors has also authorized a payout of $100 million to its shareholders in a process known as a return of capital.

"To understand why the Board is taking this new direction, it is critical to understand why it was elected and how QLT's previous strategic plan could have put the company in a precarious financial position," QLT chairman Jason Aryeh said in a letter to shareholders publishes Monday.

"Our board was elected by concerned and frustrated shareholders, disquieted that the company's spending and headcount seemed to be inappropriate given the nature of its assets, size and focus."

Aryeh said the new board has done a thorough analysis and determined that the shareholders concerns were justified. Among other things, QLT will become more focused — concentrating its development activities on QLT091001, a synthetic oral retinoid.

The product is being investigated as a way to recover visual function by restoring a biochemical abnormality caused by a genetic mutation.

QLT has also hired Wall Street investment bank Goldman Sachs to explore the spinout or sale of its punctal plug delivery system and to determine whether to keep or divest its Visudyne business.